Anyone Fed Up With Banks?
The consumer backlash over proposed fees created a spike in CU membership growth.
In the first weeks following banks’ announcements of their infamous debit card fees, more consumers joined credit unions than joined during all of last year. Credit unions welcomed more than 650,000 new members, and those consumers brought an estimated $4.5 billion in new deposits with them.
The membership surge began with Bank of America’s announcement in late September that it would charge many of its debit card customers $5 per month. The bank later scuttled its plans, but the damage was done. A disgruntled customer not only moved her money but shared her anger on Facebook, spawning the movement known as Bank Transfer Day. She urged consumers to switch from big banks to local credit unions and community banks.
Tropical Financial Credit Union experienced what credit unions throughout the country did during this time—a wave of media attention raising consumer awareness of the credit union difference. Soon after Bank of America announced its new debit card fees, Amy McGraw got a call from a local television station. The reporter wanted to interview anyone who was fed up with big-bank greed and had jumped ship to join the credit union.
McGraw, vice president of marketing at the $600 million asset credit union in Miramar, Fla., figured it would be easy to fill the reporter’s request. She issued a mass email to branch managers and within minutes found a new member who fit the bill. McGraw suggested doing the interview at the member’s workplace, giving that business some free publicity, too.
“The next thing I knew,” McGraw says, “I got a call from the business owner.” She wanted to know if credit unions offered business accounts and how long credit unions had been in existence. After McGraw answered those two questions with “yes,” and “for more than 100 years,” the business owner expressed shock that she hadn’t discovered credit unions earlier. “You’re not alone,” McGraw replied.
To McGraw, this incident is a classic example of what credit unions are up against in their attempts to attract new members: low levels of consumer awareness. Membership growth slipped to 0.7% for 2010, lagging behind the overall U.S. population growth rate for the first time in the past five years, according to CUNA’s 2011-2012 National Member Survey.
Bank Transfer Day and consumers’ anger over big-bank fees might be the spark that lights credit unions’ membership growth for years. Until now, credit unions’ anemic membership growth has been concerning. “It’s because credit unions often cling to old methods of reaching people,” McGraw explains. “There’s a saying that goes, if you continue to do what you’ve always done, you’ll continue to get what you’ve always gotten.”
Clinging to old methods stems from “fear of the unknown—the fear of stepping outside your comfort zone,” says McGraw, who was named the CUNA Marketing & Business Development Council’s Marketing Professional of the Year in March 2011. “Credit unions that will succeed at grabbing market share are those not afraid to try something new.”
Count McGraw among them. Before starting her current job at Tropical Financial in September, she was the marketing director at $130 million asset Public Service Credit Union in Romulus, Mich. There she executed a rebranding campaign that changed how member service representatives interacted with members and potential members.
“We trained them to look the person in the eye and ask, ‘What do you want out of life?’ rather than just ‘What can I do for you today?’ It took lots of staff training and retraining to get that across—that they weren’t there only to do transactions anymore,” McGraw says. Such strategies helped Public Service attain a 21% growth in membership over four years.
Since arriving at Tropical Financial in early September 2011, McGraw has launched new marketing strategies. She has always liked using testimonials to let members do the talking about credit union benefits. At Tropical Financial, she hit on the idea of having a local radio personality “tell it like it is” about credit unions.
She got demo tapes from various local radio hosts. Kenny Walker, who’s also the stadium voice of the Miami Dolphins, stood out. “He knew about credit unions, and he believed in them,” McGraw says. “He wasn’t just reading talking points.”
Then in October she created a SwipeWhere ItCounts.com campaign, which gives new checking accountholders a $1 cash bonus for every five debit card purchases through April 2012, not to exceed $5 per month. The campaign went from idea to implementation in only 24 hours.
McGraw acknowledges she has a bigger advertising budget now than she did at Public Service. But there her strategies included using social media, becoming a local television anchorman’s go-to person for financial news, and being active in the community. Any credit union, no matter its size or marketing budget, has plentiful opportunities to garner consumer awareness, McGraw contends.
“It’s a matter of pushing the fear aside,” she says. “Credit unions are in a time that’s unlike any other. We need to be shouting our message from the rooftops. This is our moment.”
Next: A better flavor of financial services
A better flavor of financial services
A young man walks up the street, looks straight into the camera, and says, “Sixty percent of you don’t know what a credit union does. Hmmm. That’s like not knowing what chocolate tastes like.”
That’s a segment from a recent television ad that ran in Alabama and Florida. The spot was part of a campaign sponsored by the League of Southeastern Credit Unions (LSCU) and 100 credit unions in the two states, nearly half of the 238 credit unions affiliated with LSCU.
“I think the message is right; the target audience is right. Everything about this ad is what we need. We want to get the younger crowd in here,” says Mark Johnson, CEO of $72 million asset Naheola Credit Union in Pennington, Ala.—a sponsoring credit union.
Although the campaign aims for Generation X (now ages 31 to 46), anyone of any age can relate to the core message: Credit unions save people money, and many consumers don’t know about them.
CUNA’s 2011-2012 Survey of Potential Members found only 33% of nonmembers were either “very” or “somewhat” familiar with credit unions’ services and benefits. The proportion plummeted to 3% among nonmembers ages 18 to 24.
“We still run into a lot of folks who think you have to be part of the military to join our credit union,” says Greg Wheeler, vice president of marketing and product development at $1.1 billion asset Tyndall Federal Credit Union in Panama City, Fla., a participating credit union. “These ads show that just about anybody can join a credit union. In fact, you’re hard-pressed these days to find a way not to be able to join. But a lot of people still don’t know that.”
The seeds of the campaign date back a couple of years, says Patrick La Pine, LSCU president/CEO. Discussion of a cooperative image campaign had surfaced before that, but the consensus was that not enough credit unions would contribute because of the bleak economy, so they shelved the idea.
As La Pine met and talked with credit unions, he heard that many wanted to reconsider the idea. “That was the second half of 2009,” he says, “and the economy was still bad. I was surprised how many credit unions were passionate about doing a campaign. They said there’s never been a better time to differentiate ourselves from the banks.”
LSCU assembled a task force of credit union representatives to get the project under way. Credit unions’ voluntary contributions totaled $1.2 million; LSCU chipped in $100,000 to hire an agency to produce the creative. “We have 14 media markets between the two states,” La Pine says. “We told our credit unions that money raised in their media market would stay in their media market.” The campaign ran for four to six weeks in September and October 2011. The duration varied depending on the money raised in each market.
Credit unions contributed according to a fair-share formula based on size. “We had a couple of our larger credit unions that said, ‘If this small credit union down the street can’t afford to pay, we’ll pay its fair share, too,’” La Pine reports. “We saw a lot of cooperative spirit.”
The campaign included television, radio, billboards, online ads, and the tagline, “Credit unions: We’re giving banking a better name.” The ads led consumers to a website, betternameforbanking.com, where they could calculate savings for various products at a credit union compared to a bank. Plus, they could enter a zip code to find a nearby credit union. The site drew 65,000 hits in five weeks. Surveys to measure the campaign’s impact are underway.
LSCU plans to run the campaign again in spring 2012. “The premise is to make this a sustainable campaign,” La Pine says.
Next: Opportunity doubled
With tight budgets, credit union marketers might think they must make a choice: Should we reach out to young adults or the Hispanic segment?
“What they don’t realize is that those are the same thing. It’s somewhat synonymous to talk about reaching the younger market and the Hispanic market,” says Miriam De Dios, vice president at Coopera, a subsidiary of the Iowa Credit Union League and a CUNA strategic partner.
Hispanics make up 16% of the total U.S. population, and the median age of this segment is 27, compared with 41 for whites, according to the 2010 U.S. Census.
“The largest opportunity is in reaching the first-generation market,” De Dios says, “because they’re more likely to be unbanked and underserved. Projections show that second-generation Hispanics will outnumber their parents by 2020. But if you reach the first-generation group, you’ll earn the loyalty of the second generation.”
A common mistake credit unions make is to start marketing before thinking through their processes, De Dios says. For example, how difficult is it for someone who’s an immigrant to open a new account with you? What identification and documentation do you require? “Look at whether your branch is welcoming,” De Dios adds. “What about your signage? Do you have a children’s play area?”
Build community relationships and partnerships. Volunteering at local Hispanic community events or serving on an organization’s board shows true commitment. “That often produces better results than having a big billboard campaign or spending a lot of money on elaborate marketing,” De Dios says.
Designing the right products—or tweaking current offerings—also are key. Travis Credit Union created a noninterest-earning checking account for noncitizens. And a share-secured credit card helps new Hispanic members build credit history.
“We help them get away from check cashing stores and payday lenders who take advantage of them,” says Sherry Cordonnier, director of corporate relations for the $1.9 billion asset credit union in Vacaville, Calif. Travis has served the Hispanic market for more than two years, and has since seen a 5% growth in Hispanic membership each year.
“We’re still in what I call a foundational phase,” Cordonnier says. “Trust is a big issue with this population. We want to make sure we’re providing financial education for our Hispanic members, building their trust in us, and developing products that speak to their needs.”
Des Moines (Iowa) Metro Credit Union has served the Hispanic market for four years. It, too, has tailored products to this population, and it has a member advisory council that serves as a sounding board. Hispanics are now 6% of the credit union’s membership, which reflects the Hispanic makeup of the community as a whole, says Traci Stiles, business development manager of the $42 million asset credit union.
Special products include a vendor discount program. Hispanic members receive discounts at five participating Hispanic businesses. “It’s an added value for the members,” Stiles says, “and we’re driving customers to those businesses, as well.”
Another product is the credit-builder loan for members who have no credit history. An initial loan of up to $500 comes due in six months. Once it’s paid back, the member can obtain a $1,000 loan for a 12-month term and, once it’s repaid, become eligible for a car loan or larger personal loan.
“Reaching the Hispanic market may not be something you’d think a $42 million credit union in Iowa would be doing,” Stiles says. “But with the right strategies and the right staff in place, any credit union can do this, whether you’re big or small.”
BANK TRANSFER DAY: THE START OF SOMETHING BIG
Bank Transfer Day started after Bank of America customer Kristen Christian decided to move her accounts because of high fees. A month of national and local media attention followed. Media such as the Associated Press, “ CNBC,” “ABC News,”“NBC’s The Today Show,” The Wall Street Journal, The Washington Post, The New York Times, andBusinessweek all touted credit unions’ low fees and consumers’ disgust with big banks. More than 56,000 visitors searched CUNA’s website—asmarterchoice.org—which includes a credit union locator.
But then something happened.
One by one, big banks including Bank of America backpedalled, cancelled their proposed debit card fees, and proclaimed they “heard consumers speak.”
A CUNA survey during this time revealed consumers moved by tens of thousands, shifting their money by thehundreds of millions, to credit unions in the weeks leading up to Bank Transfer Day. And on the day itself—Nov. 5—CUNA estimates credit unions welcomed 40,000 new members.
“Any day is a good day for a consumer to become a credit union member,” CUNA President/CEO Bill Cheney wrote on The Huffington Post’s website. “Because when consumers join credit unions, they take the first step for themselves and their families toward financial freedom.”
Growth was particularly noticeable at larger credit unions. About 70% of credit unions with more than $100 million in assets reported seeing growth in membership and deposits, according to CUNA research.
Credit unions have a best-in-class customer reputation rate, according to the Harris Poll: 87% of members say they’re extremely/very likely to continue as members of their credit unions. That compares with 40% for Bank of America customers.
Credit unions and community/regional banks provide consumers with more information and tools to make informed financial decisions, the Harris Poll concludes, adding that big institutions will have to make significant, fundamental changes to win back their customers’ trust.